Reliance Industries Q1 Results: Profit Rises 7.9% Sequentially, Misses Estimates

Reliance Industries Ltd.’s first-quarter profit rose on better performance of oil-to-chemicals, retail and telecom businesses. Still, it missed estimates.

The Mukesh Ambani-led conglomerate’s consolidated profit rose 7.9% sequentially to Rs 19,443 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 21,615.4-crore consensus estimate of analysts tracked by Bloomberg.

Higher finance costs as a result of increased interest rates, rupee depreciation and lower other income impacted the profit.

RIL Q1 FY23 Highlights (QoQ)

• Revenue from operations rose 5% to Rs 2,23,113 crore, against the estimated Rs 2,25,471 crore.

• Operating profit or earnings before interest, taxes and depreciation rose 21% to Rs 37,997 crore, compared with the Rs 38,471-crore forecast.

• Operating margin stood at 17.3% versus 15.1% as of March.

The company ended the quarter-ended June with a net debt of Rs 57,655 crore compared with Rs 34,815 crore as of March. The rise is primarily on account of working capital requirement for businesses in the energy and product prices.

Overall capex was managed by cash flow generation, Srikanth Venkatachari, the joint chief financial officer at Reliance Industries, said during the earnings presentation.

Oil-to-chemicals segment Ebitda was impacted by higher energy costs, crude selling price and fuel retailing loss. Which means the company was not able to garner significantly discounted Russian crude from the global markets.

"Reliance BP Mobility Ltd. profitability was adversely impacted on account of under recovery as retail fuel prices remained capped despite higher benchmark product prices,” the company said. "Jio-BP continued to operate in the environment of under-recovery and remain committed towards the customers and Indian markets."

Operating profit for the O2C segment improved 39.2% sequentially and 62.6% year-on-year to Rs 19,888 crore, led by increase in transportation fuel cracks and better volumes.

The segment's revenue from operations rose 11% sequentially to Rs 1,61,775 crore on increased sales. Segment margin widened to 12.3% from 9.8% in the previous quarter on higher refining and petchem cracks.

Segment revenue for the upstream oil and gas business grew 81% sequentially and around threefold over a year earlier to Rs 3,625 crore in the June quarter. Operating profit rose 76% sequentially and over threefold year-on-year to Rs 2,737 crore on the back of improved gas price realisation, production from KG-D6 basin, and coal bed methane fields.

Reliance Retail Ventures Ltd.’s operating income rose marginally 1.5% sequentially on the back of increased spending by customers post improvement in Covid-19 situation. The rise was 54% year-on-year. Footfalls at 17.5 crore (175 million) were 19% above the pre-Covid levels as consumers returned to the stores.

Footfalls and digital visits translated into 22 crore (220 million) transactions in the first quarter, a growth of more than 60% over pre-Covid levels, the company said.

Jio Platforms Ltd., the holding company for digital ventures and the telecom unit, saw its revenue jump 5.3% quarter-on-quarter. The company saw an increase in average revenue per user of Rs 175.7 in the first quarter, up 4.8% sequentially. That was largely led by increase in connectivity business and customer engagements.

However, earnings were partly offset by inflationary pressures on operating cost, the company said. Total customer base, as on June 30, was 41.99 crore. The company added 3.52 crore (35.2 million) subscribers in the June quarter.

Shares of Reliance Industries ended 0.67% higher before the results were announced, tracking the 0.69% rise in the benchmark Nifty 50.